Excessive Fluctuating Progress in Markets Can Continue

Excessive Fluctuating Progress in Markets Can Continue

US 10-year bond interest rates rose to 1 percent today after the new type of coronavirus (Covid-19) was lowered to 0.90 percent with the effect of the outbreak. "Due to the high uncertainties regarding the economic outlook, it can be said that the markets will maintain their fluctuating course for a while", Economist Burumcekci explained. The US 10-year bond rate, which reached 2 percent at the beginning of the year, gradually declined with the purchases of investors in search of a safe haven after the coronavirus outbreak in China. After the Fed's surprise interest rate cut, the bond rate fell below 1 percent for the first time, seeing the all-time low of 0.90 percent, balanced at 1 percent. Reminding that the said interest rates were 2.70 percent a year ago and 1.85 percent when entering the new year, Bür Spiderçi said, "The most important factor in this extremely rapid decline is the growing concerns that the coronavirus epidemic will significantly affect global growth, especially China and the USA. " said. Burumcekci stated that the disruptions occurring in China, which is the most important supplier of the global manufacturing chain in the first stage, have negative effects on world goods supply and trade volume, and this effect is expected to strengthen significantly when combined with the contraction of demand. Pointing out that the rapid risk escape from global perception is more effective than the global recession perception, Burumcekci said, “The fact that there has not been such a sharp decline in 10-year interest rates even in the 2008 global crisis. It does not seem like a very realistic scenario to affect the economies for a long time, so the Fed moved quickly and emphasized that it could continue to relax the monetary policy with an urgent meeting by considering the risk of financial stability, and emphasized that if necessary it could continue. Apart from the PMI indices, there is no similar disadvantage worldwide as of February, so the monetary policy has started to soften and the positive news flow regarding the outbreak and the long end of the bond yield curve will disappear over time. In this context, it can be said that the markets will maintain their volatile course for a while due to the high uncertainties regarding the economic outlook. However, if the Fed's moves are followed by other central banks, it may be possible that the panic air will dissipate in the markets, which should be accepted only at this stage in terms of the economic outlook. "